Apr 19, 2016

Finance English practice: Unit 42 — Financial Regulation and Supervision

19 cards
, 94 answers
  • Complete the sentences below. Use the key words if necessary.
    • Government regulation

      key words
      compliance officer      ○      deregulated      ○      disclosure      ○      fraudulent


      Mei Lee is the at a large US bank with subsidiaries in major financial centres: she has to make sure that everybody obeys government regulations and follows internal procedures.

      ‘The financial services industry was in the 1980s: lots of government controls were removed to make the market freer and more efficient. But a lot of regulations still exist. We’re still regulated and supervised by government agencies. For example, in Britain there’s the Financial Services Authority (FSA), and here in the States there’s the Federal Reserve (or the Fed) and the Securities and Exchange Commission (SEC).

      The Fed supervises banks, and the SEC tries to protect investors by requiring full — it makes sure that public companies make all significant financial information available. And it tries to prevent or illegal practices in the securities markets, such as companies artificially raising their stick price by using dishonest accounting methods or issuing false information.’

      Internal controls

      key words
      insider trading      ○      dealing      ○      confidential      ○      price-sensitive      ○      Chinese walls      ○      conflicts of interest


      ‘I have to make sure no one here does any or — buying or selling securities when they have or secret information about them. For example our mergers and acquisitions department often has advance information about takeovers. This information is usually : if you used it you could make the share price change. This gives the people in M&A huge opportunities for profitable insider dealing, but we try to keep what we call “ ” around departments that have confidential information. This means having strict rules about not using or spreading information.

      Another thing I have to deal with is — situations where what is good for one department is not in the best interests of another department. For example, if banks want to win investment banking business from a company, their analysts in the research department could produce inaccurate reports exaggerating the client company’s financial situation and prospects. This could lead the fund management and stockbroking departments to buy securities in that company, or recommend them to clients, because of false information.’

      Sarbanes-Oxley

      key words
      banks      ○      oversee      ○      lucrative      ○      money laundering      ○      legitimate


      ‘Because of lots of serious conflicts of interest in , the US government passed the Sarbanes-Oxley Act in 2002. This requires research analysts to disclose whether they hold any securities in a company they write a research report about, and whether they have been paid by the company.

      Another outcome of Sarbanes-Oxley was the establishment of a board to or supervise the auditing of public companies, and to prevent auditors doing non-audit services while they’re auditing a company. That’s because an auditing firm that is also doing — profitable — consulting work with a company might be tempted not to audit the accounts very carefully, and to ignore evidence of illegal practices or “creative accounting”.

      Another part of my job is maki9ng sure no criminal organization uses us for — converting illegal or criminal funds into what looks like or legal income, by passing it through a lot of transactions, companies and bank accounts.’

    • Match the definitions with words below.
      • adjective meaning able to influence or change a price —  . . . 
        price-sensitive
        • disclosure
        • fraudulent
        • insider dealing
        • money laundering
        • oversee
        • price-sensitive
        • compliance

      • behaving according to regulations, rules, policies, procedures, etc. —  . . . 
        compliance
        • insider dealing
        • disclosure
        • price-sensitive
        • money laundering
        • compliance
        • fraudulent
        • oversee

      • buying or selling stocks when you have confidential information about a company —  . . . 
        insider dealing
        • disclosure
        • price-sensitive
        • money laundering
        • oversee
        • compliance
        • insider dealing
        • fraudulent

      • disguising the source of money acquired from criminal activities —  . . . 
        money laundering
        • money laundering
        • disclosure
        • price-sensitive
        • insider dealing
        • oversee
        • compliance
        • fraudulent

      • adjective meaning dishonest and illegal (intending to get money by deceiving people) —  . . . 
        fraudulent
        • money laundering
        • insider dealing
        • disclosure
        • fraudulent
        • oversee
        • price-sensitive
        • compliance

      • giving investors and customers all the information they need —  . . . 
        disclosure
        compliance
        • disclosure
        • oversee
        • price-sensitive
        • fraudulent
        • money laundering
        • insider dealing

      • to watch something to make certain that it is being done correctly —  . . . 
        oversee
        • fraudulent
        • insider dealing
        • disclosure
        • oversee
        • money laundering
        • price-sensitive
        • compliance

    • Match the two parts of the sentences.
      • Criminal organizations try to hide the origin of illegally received money  . . . 
        by moving it through lots of different companies and bank accounts.
        • by not following accepted accounting methods or by publishing false information.
        • by also paying them to do consulting work.
        • by publishing reports that overstate the companies’ financial health.
        • by moving it through lots of different companies and bank accounts.
        • by acting on that information and buying and selling the stock.

      • People with privileged, confidential information about a stock could make money  . . . 
        by acting on that information and buying and selling the stock.
        • by publishing reports that overstate the companies’ financial health.
        • by also paying them to do consulting work.
        • by not following accepted accounting methods or by publishing false information.
        • by acting on that information and buying and selling the stock.
        • by moving it through lots of different companies and bank accounts.

      • Some banks might try to get business from companies, e.g. issuing stocks and bonds,  . . . 
        by publishing reports that overstate the companies’ financial health.
        • by acting on that information and buying and selling the stock.
        • by publishing reports that overstate the companies’ financial health.
        • by moving it through lots of different companies and bank accounts.
        • by also paying them to do consulting work.
        • by not following accepted accounting methods or by publishing false information.

      • Some companies might try to make their auditors less rigorous  . . . 
        by also paying them to do consulting work.
        • by not following accepted accounting methods or by publishing false information.
        • by publishing reports that overstate the companies’ financial health.
        • by acting on that information and buying and selling the stock.
        • by also paying them to do consulting work.
        • by moving it through lots of different companies and bank accounts.

      • Some companies try to raise their stock price  . . . 
        by not following accepted accounting methods or by publishing false information.
        • by moving it through lots of different companies and bank accounts.
        • by publishing reports that overstate the companies’ financial health.
        • by acting on that information and buying and selling the stock.
        • by not following accepted accounting methods or by publishing false information.
        • by also paying them to do consulting work.

    • Complete the newspaper headlines with words from the box.
      • the box
        Chinese walls      deregulation      compliance officer      insider traders      conflicts of interest       laundering money


        1. FSA warns that criminal gangs are still through bureau de change.

        • 2. Sarbanes-Oxley has greatly reduced for auditing firms, report says.

          • 3. Senator says even the smallest financial company needs a .

            • 4. FSA says it’s time to get tough on : they are almost never prosecuted.

              • 5. Fed says not functioning in investment banks: suspicious trading is increasing.

                • 6. 25 year after bankers say there’s still too much government control.

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